20040818Notice of Proposed Settlement Order No 29567.pdf

Office of the Secretary
Service Date
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
August 18, 2004
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR AUTHORITY
TO IN CREASE ITS INTERIM AND BASE
RATES AND CHARGES FOR ELECTRICSERVICE.
CASE NO. IPC-O3-
NOTICE OF PROPOSED
SETTLEMENT
NOTICE OF
MODIFIED PROCEDURE
NOTICE OF VACATED
PRE FILE DATES
ORDER NO. 29567
After conducting public and technical hearings in Idaho Power Company s general
rate case, the Commission issued Order No. 29505 on May 25 , 2004. In Order No. 29505 the
Commission ordered the Company to calculate its income tax expense using a five-year average.
This adjustment reduced the Company s annual revenue requirement attributable to income tax
expense by $11 504 677 and prompted Idaho Power to seek reconsideration of this issue (as well
as others).
In Order No. 29547 issued July 13, 2004, the Commission granted reconsideration on
that portion of Order No. 29505 relating to the calculation of the income tax expense for revenue
requirement purposes.! In anticipation of the technical hearing on reconsideration scheduled for
September 10, 2004, Idaho Power and Commission Staff ("the Parties ) entered in to settlement
discussions that resulted in a Stipulation executed and filed August 16, 2004. The Parties also
filed a Joint Motion requesting that the Commission accept the Parties' Settlement of the income
tax expense issue.
In light of the time constraints on reconsideration imposed by Idaho Code 9 61-626
the Commission gives notice of the settlement reached by Staff and the Company. We seek
1 The Commission corrected a calculation error and denied reconsideration of the other issues.
NOTICE OF PROPOSED SETTLEMENT
NOTICE OF MODIFIED PROCEDURE
NOTICE OF VACATED PREFILE DATES
ORDER NO. 29567
comments from the public and other parties to the rate case about whether the Commission
should adopt the settlement proposed by Idaho Power and Staff. The Commission also vacates
the simultaneous prefile and rebuttal testimony filing deadlines set forth in its Notice of
Scheduling issued August 2, 2004, but retains the September 10, 2004 hearing date in the event
live testimony is needed.
NOTICE OF PROPOSED SETTLEMENT
YOU ARE HEREBY NOTIFIED that Idaho Power and Staff filed a Joint Motion for
Acceptance of Settlement accompanied by a Stipulation with the Commission on August 16
2004. The Parties agreed that Order No. 29505 should be modified to utilize statutory income tax
rates to compute test year income tax expense. ApplYing the statutory rates results in a federal tax
rate of 35% (net of state benefit, 32.795%) and a state tax rate of 6.3 %. On a normalized basis, this
change (if approved by the Commission) would increase Idaho Power s Idaho jurisdictional test
year revenue requirement by $11 504 677.
YOU ARE FURTHER NOTIFIED that for the period June 1 2004 through May 31
2005, the Company will compute and record monthly in a regulatory asset account an amount equal
to the additional revenue the Company would have received through its energy rates if its revenue
requirement had been determined using the statutory income tax rates rather than the five-year
historic average income tax rates. The energy rate to be used to compute the additional monthly
revenue to be recorded in the regulatory asset account will be determined in accordance with the
formula:
Where:
a = $11 504 667 (normalized increased revenue)
b = 12,476 747 MWh (normalized Idaho jurisdictional energy sales adjusted for load
growth of3.14% per year)
c = $0.92209/MWh
The monthly entry in the regulatory asset account will be computed by multiplYing
actual MWh sales during the month by $0.92209/MWh. The total amount recovered will include
NOTICE OF PROPOSED SETTLEMENT
NOTICE OF MODIFIED PROCEDURE
NOTICE OF VACATED PREFILE DATES
ORDER NO. 29567
interest on the regulatory asset from June 1 , 2004 at the PCA carrying charge rate, which is
currently one percent (1 %). Exhibit 1 to the Settlement Stipulation shows how the regulatory asset
will be accrued assuming normalized Idaho jurisdictional sales levels would occur. To effectuate
the deferral, the Parties propose a series of accounting entries that are detailed in the Stipulation.
YOU ARE FURTHER NOTIFIED that in addition to the recovery of the income tax
expense for the June 1 , 2004 through May 31 , 2005 period described above, $11 504 677 will be
included in the Company s base rates for ongoing recovery after June 1 2005.
YOU ARE FURTHER NOTIFIED that the Company will not seek to recover in its
revenue requirement any deficiency assessed by the Internal Revenue Service related to the one-
time adjustment associated with the capitalized overhead cost tax method change for the years
1987 through 2000.
YOU ARE FURTHER NOTIFIED that the Parties recommend that the Commission
accept this Stipulation without material change or condition. The Parties ask that the Stipulation
be entered into the record in this proceeding and no party shall oppose its adoption or appeal any
portion of this Stipulation if the Stipulation is subsequently approved by the Commission without
material change.
YOU ARE FURTHER NOTIFIED that the Parties agree that the Stipulation is in the
public interest and that all terms of the Stipulation are fair, just and reasonable. The Parties
support adoption of the Stipulation and acceptance of the Stipulation by the Commission with the
intention that settlement will allow Idaho Power to continue its compliance with the
normalization provisions of the Internal Revenue Code and associated Treasury Regulations, and
will allow Idaho Power to continue to obtain the benefits of accelerated depreciation.
YOU ARE FURTHER NOTIFIED that the Settlement Stipulation in Case No. IPC-
03-13 together with accompanying motion and exhibit can be reviewed at the Commission
office and at the principal office of Idaho Power Company during regular business hours. Idaho
Power Company is located at 1221 West Idaho Street in Boise, Idaho (208-388-2323). The
settlement and motion are also available for viewing on the Commission s Website
www.puc.state.id.under the "File Room" icon.
YOU ARE FURTHER NOTIFIED that the Commission is not bound by any
settlement reached by the Parties. Pursuant to Rule 276, the Commission will independently
NOTICE OF PROPOSED SETTLEMENT
NOTICE OF MODIFIED PROCEDURE
NOTICE OF VACATED PREFILE DATES
ORDER NO. 29567
review any settlement proposed to determine whether the settlement is just, fair and reasonable
and in the public interest, or otherwise in accordance with law or regulatory policy. The
Commission may accept the settlement, reject the settlement, or state additional conditions under
which the settlement will be accepted. IDAPA 31.01.01.276.
NOTICE OF MODIFIED PROCEDURE
YOU ARE FURTHER NOTIFIED that the Commission has reviewed the settlement
filings in Case No. IPC-03-13. The Commission has preliminarily determined that the public
interest may not require a hearing to consider the issues presented in the Joint Motion for
Acceptance of Settlement, and that the issues raised by the proposed settlement may be
processed under Modified Procedure (i., by written submission rather than by hearing).
IDAPA 31.01.01.201-204. In so doing, the Commission notes that Modified Procedure and
written comment have proven to be an effective means for obtaining public input and
participation.
YOU ARE FURTHER NOTIFIED that the Commission will not hold a hearing in
this proceeding unless it receives written protests or comments opposing the use of Modified
Procedure and stating why Modified Procedure should not be used. IDAP A 31.01.01.203.
YOU ARE FURTHER NOTIFIED that if no protests or comments are received
within the deadline, the Commission may consider the matter and enter its Order without a
hearing. If protests or comments are filed within the deadline, the Commission will consider
them and may set the matter for hearing or may decide the matter and issue its Order on the basis
of the written positions before it. IDAPA 31.01.01.204.
NOTICE OF EXPEDITED COMMENT/PROTEST PERIOD
YOU ARE FURTHER NOTIFIED that due to the reconsideration timeframes set
forth in Idaho Code 9 61-626, the Commission finds that a shortened comment/protest period is
required in this case. Thus, the deadline for filing written comments or protests with respect
to the proposed settlement is Wednesday, September 1, 2004.IDAPA 31.01.01.202.02.
Persons desiring a hearing must specifically request a hearing in their written protests or
comments.
NOTICE OF PROPOSED SETTLEMENT
NOTICE OF MODIFIED PROCEDURE
NOTICE OF VACATED PREFILE DATES
ORDER NO. 29567
YOU ARE FURTHER NOTIFIED that written comments concerning the proposed
settlement must be mailed to the Idaho Public Utilities Commission and Idaho Power Company
at the following addresses:
COMMISSION SECRETARY
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074
BARTON L. KLINE
IDAHO POWER COMPANY
PO BOX 70
BOISE, ID 83707-0070
Email: bklineCfYidahopower.com
Street Address for Express Mail:
472 W. WASHINGTON STREET
BOISE, ID 83702-5983
These comments should contain the case caption and case number shown on the first page of this
document. Persons desiring to submit comments via e-mail may do so by accessing the
Commission s home page located at www.puc.state.id.. Click the "Comments and Questions
icon, and complete the comment form, using the case number as it appears on the front of this
document. These comments must also be sent to the Applicant at the e-mail addresses listed
above.
NOTICE OF VACATED PRE FILE DATES
YOU ARE FURTHER NOTIFIED that, pursuant to the Order set forth below, the
Commission has chosen to vacate the prefile deadlines set forth in its Notice of Scheduling
issued August 2, 2004. However, the Commission retains the September 10, 2004 hearing date
in the event live testimony is needed. We find that no party to this proceeding will be prejudiced
by our decision and that it is in the best interest of all involved to accommodate the Parties
attempts to settle this matter.
ORDER
IT IS HEREBY ORDERED that the Joint Motion for Acceptance of Settlement be
processed under Modified Procedure as set forth above. Comments should be submitted no later
than September 1 , 2004.
IT IS FURTHER ORDERED that the current dates for prefiled direct and rebuttal
testimony on reconsideration are hereby vacated. However, the Commission reserves the current
hearing date of September 10, 2004 for possible hearing if live testimony is needed.
NOTICE OF PROPOSED SETTLEMENT
NOTICE OF MODIFIED PROCEDURE
NOTICE OF VACATED PREFILE DATES
ORDER NO. 29567
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho, this /
j+o-
day of August 2004.
lJ~
MARSHA H. SMITH, COMMISSIONER
Out of the Office on this Date
DENNIS S. HANSEN, COMMISSIONER
ATTEST:
Je D. Jewell
ission Secretary
O:IPCE0313 settlemnt ntc
NOTICE OF PROPOSED SETTLEMENT
NOTICE OF MODIFIED PROCEDURE
NOTICE OF VACATED PREFILE DATES
ORDER NO. 29567